All about taxes in Turkey

Taxes in any country are considered a source of revenue in that country, which contribute in one way or another to support the economy, by transferring those taxes to the state treasury and benefiting from them to feed salaries or by reusing them to provide the necessary services to citizens.

In our article today, we will talk about everything related to taxes in Turkey, and the most frequently asked questions related to the tax costs for Turks and foreigners.

What is meant by tax?

Tax is a sum of money imposed by the state on its citizens when they carry out an economic activity, or as a result of their benefiting from some of the services provided by the government

Do foreigners pay additional taxes in Turkey?

Turkey, like other countries, allocates a set of taxes for every economic activity. Turkey differs from other countries in its dealings with foreign nationalities. It has given the foreign investor the freedom to invest and establish his own company, and he also has the right to own, sell and buy, like any Turkish citizen without Imposing any additional taxes in addition to the regular taxes incurred by the Turkish citizen.

The additional costs that a foreigner needs in Turkey are summed up in the costs of translating documents or using intermediaries within Turkish territory or the need for a sworn translator in some cases. .

Tax rates in Turkey:

Tax rates in Turkey have many advantages, including:

Turkey is characterized by low tax rates compared to prices in other countries

This has been explained by the Organization for Economic Cooperation and Development, by considering tax rates in Turkey as low and encouraging investment in Turkey.

Clear and specific tax laws in Turkey, which leave no room for doubt or miscalculation in investment, and thus create a comfortable and clear investment atmosphere.

All tax costs in Turkey are set, in line with international tax-related standards.

After a long study and analysis to put the most reasonable tax values

Turkey constantly introduces amendments to tax laws, in order to ensure the best investment

These amendments may include permanent tax reduction, or sometimes temporary in order to encourage investment in Turkey.

Types of taxes in Turkey:

There are three main types of taxes in Turkey

Which:

Income Taxes

Expense taxes

Wealth and property taxes.

There are also many other types of taxes that are subordinate to the main taxes

Which we will discuss in order in the following paragraphs:

Income Taxes in Turkey:

Income taxes in Turkey are divided into a number of parts. Below are the details.

What is meant by income tax?

Income tax is a type of tax imposed by the Turkish government on individuals or companies involved in practicing a specific business or profession, which earns them profits during specific periods of time. The income tax is a percentage of those profits achieved by individuals or companies.

Types of Income Taxes:

As mentioned earlier, income taxes in Turkey are divided into two main types,

They:

Income taxes for individuals

Corporate income taxes.

Factors affecting income taxes in Turkey:

The value of income tax in Turkey is directly related to two main factors that they control directly, whether they are taxes for individuals or companies.

They are:

Possible income sources

net profit

Income taxes for individuals in Turkey:

Income taxes in Turkey are determined for individuals who own a private business or profession of their own. The value of the income tax for individuals is calculated after calculating the total net value of the profits earned by the individual during one year of work.

Below, we will mention:

Income resources determined by the Turkish state to collect income taxes from individuals:

Monthly salary for individuals.

Profits of business resources

Agricultural resource profits

Profits of a service business that are not restricted to a specified income.

Profits from real estate resources, that is, the profits that individuals derive from renting real estate in Turkey.

Profits of investment business of all kinds.

Notes related to income tax for individuals:

Individuals residing inside and outside Turkey

If the period of their stay in Turkey is up to six months during the year, individual income taxes are calculated after calculating the total net profits generated from their business inside and outside Turkey, and then the income tax is calculated as a percentage of these profits.

In the event that the period of residence of individuals within Turkey does not reach six months per year, the individual income tax is calculated after calculating the total of their profits resulting from their work in Turkey only, and the individual income tax is calculated as a percentage of these profits.

Income taxes for companies in Turkey:

Income taxes for companies and institutions in Turkey are determined as a percentage of the net profits that companies achieve as a result of their operations in one year.

Corporate taxes in Turkey are levied on personalities who legally represent those companies or institutions.

Types of companies and establishments covered by corporate income taxes in Turkey:

Companies of all kinds.

Some types of association.

Public economic establishments in Turkey.

Private economic establishments, whose ownership belongs to some companies, institutions or associations.

mutual projects.

Notes on Income Taxes for Companies in Turkey:

The income tax rate for commercial companies in Turkey ranges between 20% and 22% of the value of the profits they achieve, although the Turkish government adopts the lowest percentage in corporate taxes.

As for companies residing in Turkey, their income tax rate is 15% of the value of the profits.

Income tax for companies residing in Turkey is paid when profits are distributed to the individual shareholders of the company.

Non-resident companies in Turkey pay 15% of the value of profits, as company income tax.

Income tax is paid to companies not residing in Turkey when profits are transferred to branches or headquarters located within Turkey.

Corporate income tax is calculated as a percentage of profits, and is never related to the capital of a company.

Therefore, taxes are not collected until after the money generated from the profits has been transferred or distributed.

Expense taxes in Turkey:

What is meant by expense taxes?

It is the tax imposed on consumption in its various forms, and on the various consumed resources.

Types of Expense Taxes in Turkey:

This type of tax in Turkey includes several main types, namely:

value added tax

special consumption tax

Banking and Insurance Transaction Tax

stamp tax

VAT in Turkey:

The value-added tax in Turkey is known as the tax on the indirect consumption of resources, imposed by the Turkish government on various types of imports and commercial, agricultural, industrial and handicraft goods.

Value added tax is imposed on each stage of supply, and it is also imposed on companies, institutions or individuals as the main consumer of resources, and the rates of added tax values ​​range between 1%, 8% and 18%

Types of resources that are exempt from VAT in Turkey:

Goods exported from Turkey to other countries are exempt from VAT.

Oil drilling related business

Manufacturers within the free zones of Turkey.

Transit business

Machinery and equipment imported into Turkey with an investment certificate.

Insurance and banking transactions

Deliveries made by diplomats, representatives of international organizations and representatives of foreign embassies are exempt from value added tax, and the concerned employees are also exempted from the tax, but in this case there is a requirement for reciprocity with the other party.

Port and airport services for aircraft and ships, all are exempt from VAT in Turkey.

Roaming services provided to foreign residents inside Turkey, but provided that there is reciprocity from the counterparty.

Notes related to value added tax:

 In order to encourage real estate investment in Turkey, the Turkish government has exempted foreign investors, and Turks residing outside Turkey, from the value-added tax imposed on bank transfers in foreign currencies.

Special Consumption Tax:

The special consumption tax is paid only once, and this tax applies to four types of special products, with different values ​​of the applicable tax.

Petroleum products, meaning petroleum derivatives, lubricating oils in addition to solvents, and the various types associated with petroleum products.

Vehicles of all kinds, cars of all kinds, motorcycles, planes, ships, and various other types of vehicles.

Tobacco products and alcoholic beverages of all kinds

Entertainment Products

Banking and Insurance Transaction Tax:

Bank transaction tax applies to profits earned from banking transactions, such as interest on bank loans.

Notes related to banking and insurance transactions tax:

The maximum value of the tax on banking and insurance transactions is up to 5%

The interest tax for bank deposits is 1%.

No kind of tax is imposed on foreign exchange transactions in Turkey.

Stamp tax:

Stamp tax in Turkey means taxes imposed on paper transactions and written documents. Stamp tax is collected by imposing some types of stamps attached to documents.

Documents to which stamp tax applies in Turkey:

Various types of contracts.

Capital contributions in case of establishing a company.

Payment receipts

Financial and accounting data such as wages and salaries tables.

Some types of letters, such as letters of credit, guarantee and others.

Notes related to stamp tax in Turkey:

The value of the stamp tax is determined as a fixed and fixed value for some documents.

The value of the stamp tax for some papers and documents is calculated as a percentage and ranges between 0.189% and 0.948%

less than 1%

Wealth and property taxes in Turkey:

Wealth and property taxes in Turkey are imposed on three types of property, which are:

Real estate taxes.

car taxes

Inheritance and gift taxes.

Real estate taxes:

The property tax is paid annually, and is determined by the municipality in which the property is located

Other types of property taxes:

Real estate taxes include several types, which we will talk about in order:

Transfer Tax:

The transfer of ownership tax is paid when transferring the ownership of the property from one person to another, and it is the most valuable tax among other real estate taxes. Its value may reach 6.8% of the total value of the property. The transfer of ownership means the process of buying and selling, and transferring ownership in cases of inheritance, divorce, And its value in the event of transfer of ownership from the buying and selling process is 4% of the value of the property.

Capital tax: It is a tax attached to the property transfer tax.

Value Added Tax: It is related to the type of real estate, its value differs for commercial real estate from residential real estate, it is also paid during the transfer of ownership.

Real estate profit tax: It is imposed on real estate sold before the lapse of 5 years from the date of its ownership, and the tax is the real estate profit on the price difference between the new selling price and the previous purchase price.

Notary tax: Sometimes the process of transferring ownership is done at a notary public before it is officially transferred through government real estate departments, so the notary tax is 1% of the property value.

Car ownership taxes in Turkey:

Car tax in Turkey is related to two factors:

car age

car engine capacity.

Notes about wealth and property taxes in Turkey:

 Property tax is determined differently each year.

The percentage of tax value for buildings, apartments and real estate loans ranges between 0.6% and 0.1%

The rate of cultural property protection tax is up to 10%

Inheritance and endowment taxes range from 10% to 30%.

Tax Incentives in Turkey:

Turkey has relied on the application of tax incentive systems, in order to encourage Turkish and foreign investors, and it applies these systems to foreigners as well as to Turks without any difference, and the government depends on the application of four tax incentive systems

Which:

world order

regional system

extensive system

and strategic system.

These regulations differ according to the investment regions in which they are applied.

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